Google has a long history of antitrust investigations and large fines
Shivaun and Adam Raff were furious. It was March 2006, and a change to Google’s algorithm had just demoted the Berkshire couple’s price comparison website, Foundem, wiping out much of their business in one fell swoop. They tried to get hold of a human at the search engine who could help, to no avail.
It was the start of what would prove a major headache for Google. Three years later, the Raffs filed a complaint with the European Commission which led to regulators ruling in 2017 that Google had abused its market dominance as a search engine by giving an unfair advantage to its own comparison shopping service. The US firm was handed a €2.4bn (£2.2bn) fine which it continues to appeal.
Now, in an acute case of déjà vu, Google is waiting to hear if it will face a similar battle in the US. The Department of Justice is in the final stages of preparing its lawsuit against the firm, following a 14 month investigation into whether Google rigs search results to favour its own products, and if it has been abusing its dominance in advertising technology to squeeze out rivals.
For Google, there could be a double hit. The House Judiciary Committee’s antitrust panel is expected to release a report on antitrust allegations into Apple, Amazon, Facebook and Google as early as next week, recommending new laws that would give extra powers to government trustbusters.
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Sundar Pichai, the Google boss, may argue that the company “operates in highly competitive and dynamic global markets, in which prices are free or falling, and products are constantly improving”.
Still, scrutiny has been a long time coming. Google has gained a stranglehold over online search in the US and UK, generating more than $100bn (£77bn) in annual revenue globally and holding a 90pc share of the market.
Yet, since 2013, when the Federal Trade Commission wrapped up a probe without action, it has largely been left to its own devices. Now it could be facing the largest US monopoly case since Microsoft was sued 20 years ago.
Google CEO Sundar Pichai
Credit: LM Otero/ AP
Following scores of fines, talk has turned to whether a break-up might be put into motion ahead of the November election.
Damien Geradin isn’t convinced. The Brussels lawyer who has represented technology clients in multiple European Commission and UK competition investigations knows better than most that “thinking that Google is about to be broken up is daydreaming”.
“If you go after a company like Google you will probably have the best law firms, but it takes a lot of time and effort and the result is often quite disappointing.”
Take Europe. As the technology giant got a whiff of antitrust investigations in Brussels it quickly set up an office and has quietly been working with the commission to ensure it was not diminished to irrelevance after being brought to heel. Three charges later, and billions of euro in fines, and “nothing has changed”, Geradin says.
Corridors of power
Ecosia agrees. The German search engine is asking Europe to reopen its investigation into Google’s tactics, claiming that a 2018 ruling against its search engine dominance has done little to help. “Ecosia is the biggest Europe-based search engine, yet users can barely access us in Android via the auction screen,” says Christian Kroll, chief executive.
Actions such as placing Google’s own travel or maps or local business review services above its rivals in its search engine, and its payments to device makers to place its products on their phones (like paying for Chrome and search to appear on iPhones), are not the only business practices under scrutiny.
Adtech rivals say that Google has control over every part of the programmatic advertising system, allowing them to price out rivals.
What would a solution look like? Some say making Google’s search engine neutral might do the trick. Others say opening up more data from YouTube so it is easier for third party advertisers to sell placements to brands on there might work. Perhaps Android would no longer come with Google’s Maps, Gmail or Chrome pre-installed.
Competition watchdogs in the UK are carving their own regulations. The Competition & Markets Authority earlier this year urged new legislation be drawn up to hand it more powers, to allow it to block tech firms from engaging “exploitative or exclusionary practices” in the digital ad market.
UK Net digital advertisement revenue share
Senior cabinet ministers may already be more sympathetic than others to Google’s cause – Rishi Sunak, for example, sponsored Google’s “economic impact report” in 2018.
Others warn the growing dominance of Google and Facebook is starving news publishers of vital revenue. In Australia, this has culminated in regulators forcing both tech firms to pay publishers to run ads next to their content.
Google has since, however, sought to make further regulation in the space appear redundant. Last week, it pledged to pay news publishers $1bn over the next three years to licence content, starting in Germany and Brazil.
“We want to play our part by helping journalism in the 21st century,” Pichai has said.
Whether moves like these will be enough to persuade governments against introducing new laws remains to be seen. Google appears to be leaving nothing to chance, by kicking its lobbying machine into gear.
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Policy teams have been bolstered. In March Google recruited Aidan Corley, a former special adviser to the prime minister who left government last year. Meanwhile, Lucy Calladine, previously working up Online Harms legislation in the Home Office, joined Google in February.
Despite these efforts by Google to resist the onslaught, some are hopeful the forthcoming US lawsuit might pave the way for stricter rules.
“So far, Google’s public defence has been unspecific,” says Adam Heimlich, an advertising technology consultant. “In the past, they’ve proven effective at focusing behind the scenes to persuade regulators to back off. Should those efforts fail, they’re vulnerable, because the case is very strong.”
Heimlich says regulators have a bigger appetite than when the Raffs filed their complaint, or in 2013 when the US first looked at search.
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“Google broke an explicit promise to regulators by merging data from search, websites and mobiles in ‘super profiles’ on nearly all of us,” Heimlich says. “As a result of Google’s data advantage, its market shares increased, while digital innovation and quality declined. In 2013, harm from Google’s dominance was somewhat theoretical. Now it’s apparent.”
Google, unsurprisingly, rejects such claims. Matt Brittin, the company’s European president, says Google has made concessions when it has been censored by regulators in the past. “We don’t necessarily always agree with the ways regulators interpret what’s happening. But, if they find that we need to change, we do that.”
Most recently, this has been seen in how Google responded to growing competition concerns over its takeover of Fitbit, with the firm pledging to allow rival wearable companies access to Fitbit’s health data on the same terms as Google. The deal is now expected to be approved.
This may seem like a victory for Google, a sign that antitrust pressures can be easily assuaged. But as US lawmakers prepare to announce their latest suit, it is unlikely Google is resting easy. While regulation is a slow and painful process, it may finally be time for real change.
“I think Google’s executives will be unpleasantly surprised by the reaction of everyday citizens to the case against Google,” says Heimlich. “Most of us don’t want to be governed by anyone who didn’t win an election.”
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